Hi friends,
I am long term bearish on EURUSD, but in short term I think the pair is presenting an interesting buy opportunity. EURUSD after the fed’s decision broke an important resistance of 1.3440 as shown in the daily chart below, and moved higher. 1.3440 can now act as a strong support. The pair is also creating a bullish convergence on the daily chart, and looks poised to test the previous highs.
Looking at the 4 hour chart of EURUSD, there is an up-move trend line as plotted on the chart below. Now, in the first scenario, EURUSD could duplicate the last move and drop a bit lower around the trend line and then move higher again. If the pair drops and creates a bullish hidden divergence on the 4 hour chart, and continuing divergence on the 1 hour chart, then we will enter a buy trade. Remember, it can make a stop at any of the levels such as 1.3480 and 1.3460.
Alternatively, there is a bullish flag forming on the 1 hour chart, and if EURUSD breaks to the upside and settles above the flag, then also we can jump into a buy trade. Initial target should be around 1.3650 and final target could be last high at around 1.3700. Stop should be placed below the trend line in the first case and below the previous low in the second case.
Reviewing Friday’s events and trades
Last Friday, there was no major fundamental event scheduled from the US. However, Canadian inflation data was lined up, which came better than expected with a reading of 0.2% versus the previous reading of 0.0%. Other than this Euro zone consumer confidence missed the expectations and declined further. EURUSD and GBPUSD both closed above key levels of 1.35 and 1.60 respectively.
Fundamental Outlook for the day
Today few fed’s members, including Dudley and Fisher would be speaking on the monetary policies, which can be important as to know more about future QE taper possibilities. ECB President Draghi will also be speaking later in the US session, and can bring some volatility in the market as Draghi’s comments about ECB guidance are always important. Furthermore, US manufacturing PMI is also scheduled, which is expected to rise from 53.10 to 54.0. I do not expect any major movements in the market, unless there are some surprising remarks made by the Fed’s members.
This analysis is taken from today’s Daily Market Forecast, which also includes trade opportunities on: GBPUSD, AUDNZD, EURGBP, EURJPY, EURCAD, GOLD, SILVER and EURNZD.
Get it HERE: Vladimir’s Markets Forecast
Trade safe friends. Happy trading!
